Microfinance programs provide poor people with small loans given to jointly liable self-selected groups. Follow-up loans provide
incentives to repay. We experimentally investigate the influence of those features on strategic default. Each group member
invests in an individual risky project, whose outcome is known only to the individual investor. Subjects decide whether to
contribute to group repayment or not. Only those with successful projects can contribute. The experiment ends if too few repay.
We investigate group size and social ties effects and observe robust high repayment rates. Group lending outperforms individual
lending. Self-selected groups show high but less stable contributions.

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